Ottawa Unveils Calibrated Retaliatory Tariffs: What Canadian Businesses Need To Know

The next phase of the Canada-U.S. tariff dispute has arrived.

On August 25, Canada announced calibrated retaliatory tariffs on approximately $27.6 billion of U.S. imports, responding to the 50 per cent Section 338 tariffs imposed by the United States on more than 550 categories of Canadian goods. The measures put detail behind Canada’s previously announced retaliatory response, which is set to take effect on September 8.

For Canadian businesses, the implications extend well beyond the tariff rate itself. Which products are caught, the impact of the timing of entry into Canada, how contracts allocate unanticipated liability, where products and their components are sourced, and whether relief is available could all materially affect the impact.

Against this backdrop, we examine the key questions arising from Canada’s retaliatory tariffs, including which goods are affected, the implications for Canadian businesses and the practical measures businesses should consider now.

What retaliatory tariffs has Canada announced?

Canada will impose surtaxes of 15, 25, and 50 per cent on 874 tariff items covering $27.6 billion of U.S.-origin goods, effective 12:01 a.m., September 8, 2026. The rates are matched dollar-for-dollar and rate-for-rate to the corresponding U.S. Section 338 and Section 232 tariff rates.

Iron and steel is the most heavily targeted sector, accounting for approximately 31 per cent of the entire counter-tariff list—all at the 50 per cent rate. This reflects Canada’s direct mirroring of U.S. Section 232 steel duties. Fish and seafood is the second-largest category, representing nearly a third of all tariff lines, uniformly at 25 per cent. Other noteworthy sectors include dairy (5.8 per cent of items), machinery and equipment (5.7 per cent), textiles and carpets (3.7 per cent), aluminum (3.3 per cent) and tools and cutlery (3.3 per cent).

The stated objective of the countermeasures is to protect Canadian workers, producers and manufacturers harmed by U.S. tariffs by improving their competitive standing against U.S. products in the Canadian market. The product selection also may be of political significance in advance of the November 2026 midterm elections. In remarks accompanying the August 25 announcement, the government indicated that nearly $3 billion worth of imports from Ohio are exposed to Canada’s countermeasures, representing 12 per cent of total Canadian imports from the state—a state with two competitive House races. The government further noted that approximately 33 per cent of Canada’s imports from Maine, a closely watched Senate battleground, are now subject to the new counter-tariffs.

Key elements of the announcement include:

• Tariff/surtax rate: 15, 25 and 50 per cent (matched to corresponding U.S. rate)
• Effective date: 12:01 a.m., September 8, 2026
• Value of U.S. imports affected: $27.6 billion
• Key sectors: Steel and iron, fish and seafood, dairy, machinery and equipment, textiles and carpets, aluminum, tools and cutlery, apparel and clothing, furniture, railway and transport, wood and lumber, pulp and paper, electrical and electronics
• Duration/review: No stated end date; to remain in place as long as U.S. tariffs are in effect or subject to negotiations.
• Other measures announced: $7.5 billion support package for workers and businesses (see below).

List of products from the United States subject to counter-tariffs effective September 8, 2026

What U.S. goods are affected by Canada’s retaliatory tariffs?

Canada's countermeasures apply to 874 tariff items across a broad range of products drawn from those targeted by U.S. Section 338 and Section 232 tariffs. The following tables summarize notable products by applicable surtax rate.

Of note, the 50 per cent rate on steel and aluminum products represents an escalation form the existing 25 per cent counter-tariff that Canada has maintained on these goods under its Section 232 retaliatory measures since March 2025. Businesses currently paying the 25 per cent surtax on U.S.-origin steel and aluminum should therefore prepare for a doubling of the applicable rate effective September 8.

Businesses should also note the distinction between primary steel and aluminum products, which are subject to the 50 per cent rate, and steel and aluminum derivative products, which are subject to the 25 per cent rate. Correct tariff classification will be critical in determining which rate applies to a given import.

Goods subject to 50 per cent surtax

When do Canada’s retaliatory tariffs take effect?

Of particular importance for importers is the treatment of goods already in transit. Consistent with the 2018 and 2025 precedents, Canada’s countermeasures will not apply to U.S. goods that are already in transit to Canada on the day the tariffs come into force. Importers should document shipment dates and transit status carefully, given the narrow window before September 8.

What do the retaliatory tariffs mean for Canadian businesses?

The immediate impact will vary considerably depending on a business's exposure to U.S.-origin goods, its supply chain and its ability to absorb, pass through or mitigate additional costs. For some businesses, the tariffs could increase landed costs for U.S. imports and affect existing pricing and contractual arrangements. Others may need to consider alternative suppliers or sourcing markets.

How is U.S.-origin determined?

The surtaxes apply to goods that are products of the United States, as determined under the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations (SOR/94-23) (“The CUSMA Marking Regulations”).

These marking rules are not the same as the CUSMA preferential rules of origin used to determine whether goods qualify for duty-free treatment under CUSMA. They are a different and generally less stringent test, and a determination under one set of rules does not necessarily produce the same result under the other.

In general, it is easier for a good to be considered a U.S. origin product under the marking rules, such that more goods are captured than anticipated. Businesses should review the U.S. and foreign content in their imported products to assess whether each product is a product of the United States under the marking rules.

Can Canadian businesses seek tariff relief or remission?

The Government of Canada has not announced a specific pre-implementation exemption framework for the new counter-tariffs. However, based on the 2025 precedent, a post-implementation remission framework is expected. Under section 115 of the Customs Tariff, the Governor in Council may, on the recommendation of the Minister of Finance or the Minister of Public Safety and Emergency Preparedness, remit duties.

Ottawa has indicated it will consider remission requests where goods used as inputs cannot be sourced domestically or from non-U.S. sources, or where other exceptional circumstances could have severe adverse impacts on the Canadian economy. The existing remission request process remains available through the Department of Finance. Businesses should begin gathering the supporting documentation that will be required, including tariff classifications, import volumes and values, sourcing alternatives, and cost impact analyses.

What should Canadian businesses do now?

Businesses that import goods from the United States should consider several immediate steps:

• Review tariff classifications: Conduct a line-by-line review of imported products against the government's published tariff list rather than relying solely on general product descriptions.
• Assess U.S.-origin status: Review the U.S. and foreign content in imported products to determine whether each product qualifies as a product of the United States under the CUSMA marking regulations, distinct from the CUSMA preferential rules of origin. In general, it is easier for a good to be considered a U.S. origin product under the marking rules, such that more goods are captured than anticipated.
• Assess shipments already underway: Determine whether goods currently in transit qualify for transitional treatment and ensure appropriate documentation of shipment and entry dates is maintained.
• Model the cost impact: Assess the effect of the surtax on landed costs, pricing, margins and existing commercial arrangements.
• Review contracts: Consider which party bears responsibility for tariffs under existing agreements and whether tariff-related adjustment or other contractual provisions may apply.
• Consider alternative sourcing: Where exposure is significant, businesses may want to assess whether comparable products can be sourced domestically or from other markets.
• Prepare for potential remission opportunities: Businesses facing significant or unintended impacts should begin gathering information that may be required to support a remission request.

Alongside the counter-tariffs, the Government of Canada announced a $7.5 billion package of new and enhanced support measures for Canadian workers and businesses, building on the nearly $25 billion in supports already provided since U.S. tariffs were first imposed. Affected businesses should assess their eligibility for these programs.

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